NEW DELHI - While the Western media speculate about so-called ‘Chindia’s challenge to developed nations, the two Asian giants are increasingly bickering in public. Both their media have taken their gloves off and there is tension along their frozen borders. A spat between the two leading countries that have pushed globalization forward could have a serious impact on a rapidly integrating world. But against this backdrop of heightened rhetoric and tit-for-tat exchanges, the odds of calm heads prevailing in both Beijing and New Delhi appear high.

For the first time in more than a decade – since India used a perceived threat from China to justify its 1998 nuclear tests – the world’s two most populous nations find themselves bickering in public. In recent months, China turned up the heat on a long-standing border disagreement over the northeastern Indian state of Arunachal Pradesh; subtly challenged India’s claim over the disputed territory of Kashmir; and stepped up criticism of India in its official media. For its part, India has beefed up its defenses on the border with China; pointedly underlined its own territorial claims, reiterated its support for the exiled Tibetan spiritual leader; the Dalai Lama; and expelled thousands of unskilled Chinese workers. The message: India will be not be pushed around by its larger neighbor.

The two countries – which between them account for about a third of the world’s population – have not fought a war since the Chinese briefly marched into eastern India in 1962. At the same time, the public sparring is evidence of a heightened, and innately volatile, competition between nuclear-armed countries that see themselves as ancient civilizations marching toward a renewed global pre-eminence. How the two nations manage their relations has vast implications for the region and the world. Until now, no country has had to choose between an already imposing China and a fast-rising India. Indeed many, especially in Southeast Asia, welcome India’s role as a natural counterweight to Chinese hegemony. An escalating conflict, however, could force countries to step off the fence, and either acquiesce to or openly oppose China’s ambition to be Asia’s unquestioned heavyweight.

The room for miscalculation appears greater on Beijing’s side than New Delhi’s. Still basking in the afterglow of the successful 2008 Olympics, with a rapidly modernizing military and an economy three times the size of India’s – and growing faster – the Chinese may be tempted to settle talk of parity between the two nations once and for all. As in 1962, a decisive Chinese victory in a short war would severely dent India’s ambition to be seen as a peer. It would also cap the long-standing Chinese strategy of penning India in a regional box by cultivating strong ties with nations on its border – Myanmar, Bangladesh and, especially, Pakistan. With Japan in sharp demographic decline, a humbled India would also tilt the debate in Asia over which model of governance – China’s one party authoritarianism or India’s freewheeling democracy – is better suited to the region’s needs.

Domestic compulsions may also explain Chinese behavior. Uneven development and a paucity of human rights have stoked ethnic tensions among Buddhists in Tibet and Uighur Muslims in Xinjiang. Indeed, China’s vocal disputation of India’s claim to Arunachal Pradesh – referred to as southern Tibet by Beijing – is motivated, at least in part, by worries that Tibetans will nominate a successor to the current Dalai Lama from an area outside Chinese control.

The border dispute dates back to 1914, when the British drew the so-called McMahon line between the two countries. India recognizes the line; China does not. (In addition, China occupies a part of Kashmir claimed by India.) Over the past six years, 13 rounds of talks have failed to produce an agreement. In June, China upped the ante by voting against a $2.9 billion Asian Development Bank loan to India, a small portion of which was to be used for irrigation projects in Arunachal Pradesh, on India’s side of the McMahon line. At first New Delhi mustered enough support within the ADB to override Chinese objections, but in subsequent negotiations China – with support from Japan, Korea and Australia – effectively blocked the portion of the loan meant for the disputed province.

In November, Beijing objected publicly to a visit to Tawang – home to an historic Buddhist monastery and the birthplace of the sixth Dalai Lama (1683-1706) – by the Dalai Lama. A Chinese Foreign Ministry spokesman attacked the exiled leader, who has lived in India since fleeing Tibet in 1959, for his "separatist" activities, and accused him of “acts to sabotage China’s relations with other countries." Barely a week earlier, on the sidelines of a meeting of the Association of Southeast Asian Nations, Indian Prime Minister Manmohan Singh told Chinese Premier Wen Jiabao that the Dalai Lama was an “honored guest” free to travel anywhere in the country. Nonetheless, out of deference to Chinese sensitivities, India characterized the visit as purely religious and forbade the international media from reporting on the visit from Tawang.

Despite the effort by New Delhi to downplay the extent of its deteriorating ties with Beijing, a host of smaller incidents also underscore India’s concerns about its giant neighbor. India has filed more anti-dumping cases against China in the World Trade Organization than any other nation and has banned the import of Chinese toys, milk and chocolate, ostensibly for safety reasons. This summer India changed its visa regulations in a way that will effectively force several thousand unskilled Chinese workers – many of them employed in infrastructure projects – to leave the country. India has also objected strongly to the Chinese embassy in New Delhi issuing visas to Indian nationals from the disputed territory of Jammu and Kashmir on a separate slip of paper, a sign that China does not recognize India’s claim to the territory.

Nevertheless, in the short and medium term, neither China nor India – both focused primarily on economic development – have any interest in allowing their disagreements to spin out of control. In the longer term, however, for Beijing to manage successfully its relationship with New Delhi, it must learn to see India as Indians see it. Despite poor infrastructure, greater poverty and a smaller economy, Indians broadly view their country as China’s peer. India’s foreign policy establishment and strategic elite are more than willing to respect core Chinese concerns on sensitive issues such as Tibet, Taiwan and Xinjiang. They also see a natural confluence of interests in bilateral trade – despite concerns about dumping, China is India’s top trading partner – and in a unified approach to climate change. Both countries resist binding caps on, and international scrutiny of, their carbon emissions.

At the same time, India’s raucous democracy, vibrant free press and sense of impending arrival on the world stage make it nearly impossible for New Delhi to make concessions to Beijing that signal a loss of face. A belligerent China only fans Indian fears and pushes it toward deeper strategic co-operation with the United States. It also destabilizes the region by raising the stakes for Southeast Asian nations that would like to see both nations prosper rather than be forced to take sides. How Beijing manages its fraught relationship with New Delhi will go a long way toward reassuring Asia’s smaller nations of the credibility behind China’s often stated “peaceful rise” theory.

Sadanand Dhume is a non-resident fellow at the Asia Society, and the author of My Friend the Fanatic: Travels with a Radical Islamist.

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